For those of us involved in digital currencies, we are accustomed to the rapidly changing nature of this fast-growing industry. New technologies are outdated, brilliant and amazing projects are losing their luster, and the fact that it started with many privacy advocates who are sending “magic internet money” to each other has become an entirely new class of asset with advanced infrastructure around it. Every new product, application or financial instrument we add has value and attracts more participants. Trading the election is a big step for the crypto derivative market – and it's already proven worth it.
How the encryption area grew
Think back to 2017 before entering the Chicago Mercantile Exchange or the Chicago Stock Exchange Options Exchange in the cryptocurrency domain with the Bitcoin futures (BTC) offer. At the time, the most common expression of cryptography that I heard (over and over) was that it looked like “Wild, Wild West”. Lawlessness, unstable, full of fake projects and initial currency offers, for promising and short-term, or even stealing money directly from investors.
Although Bitcoin has been around since 2009, it has been very new to most people. Some of the gains were enormous – and the losses were very devastating. Several banks have called Bitcoin's hoaxes, including (perhaps the saddest) CEO of JPMorgan Jamie Dimon, who said there were scams in September 2017.
Fast forward to the future, and every bank wants to integrate blockchain technology (or already has one) to increase efficiency and reduce costs. JPMorgan and its boss showed full rotation of 180 °, even launching their JPM coin to facilitate instant payment.
Even the largest financial institutions in the United States have opened bank accounts for the major cryptocurrency exchanges in the United States, while governments around the world are either searching or piloting their own version of the cryptocurrency, with support from central banks.
The fact is that the cryptocurrency can no longer be ignored. Through improved organization and decisive measures, we have managed to get rid of many bad actors and fraudulent projects to expand the space almost without recognition.
The growth of cryptographic derivatives
The derivative space now attracted investment from institutional entities, and last year was an important step for a company backed by the New York Stock Exchange to enter the market with its physically sound futures contracts for bitcoin. In fact, the growth of the cryptocurrency regardless of emerging or falling markets was exponential, and now the derivatives are leading. However, we still have a long way to go.
The full market value of the cryptocurrency is still less than $ 300 billion. Compared to $ 9 trillion of gold or nearly $ 100 trillion from the global stock market, it is clear that crypto protection is still in its infancy.
When looking at traditional markets, derivatives usually represent more than four times the trading volume of the underlying asset. However, there is still much to trade in the crypto spot. This will not happen any longer. At OKEx, we are confident that derivatives will quickly surpass this number and will be four to five times larger in the coming years. This growth will be driven by more complex offers such as options trading.
The importance of options trading
The alternatives are so important that they give traders great flexibility and a great way to ensure their risks. As forward contracts, with option contracts, traders can buy or sell an agreed amount of the underlying asset on a fixed date in the future at an agreed price. However, unlike futures contracts, options give the buyer or seller the right, not the obligation to buy or sell at a date.
It depends on whether the dealer buys the call or the selling option. In short, the difference between the two is that with the former, a trader can exercise the right to buy Bitcoin (or the underlying asset), and with the latter he can exercise the right to sell. Since these are rights and not duties, many traders feel more comfortable, especially in a very unstable market like coding.
The options are a relatively new feature. Until mid-2019, Deribit was the only stock exchange offer supported by encryption, followed by Baakt in December 2019, and soon after the launch of OKEX and CME BTC. Despite the short space in space, BTC traders already use encryption options to generate revenue and protect their assets against uncontrolled volatility. It is also particularly useful to miners now due to the fact that Bitcoin is divided into two parts. They can use alternatives to secure future profits and secure acceptance.